"34 percent will not to be imposed on Government although it owns 34 percent"
We all know that the world market of copper and gold is at difficult situation. However, operation of Oyutolgoi LLC is going normally and cash flow has been positive, emphasized the Chief Executive Officer and the President of Oyu Tolgoi LLC Andrew Woodley.
Safety of Oyu Tolgoi LLC leads not only Mongolia, but also the international mining companies. Yesterday, 20 commercial banks approved the financing of US$ 4.4 billion to the development of underground mining of Oyu Tolgoi LLC. Oyu Tolgoi`s underground mining has more than 1000 years capacity.
It is wrong to express my and Rio Tinto`s view on political matters.
We are delivering you the interview with Rio Tinto Country-Director S.Munkhsukh.
-What role have Rio Tinto played in raising funds for underground mine?
-US$ 4.4 billion project financing is provided as a loan. It is considered as the biggest step that forwards the underground development. We raised the most of the financing needed to construct the underground mine. We have planned to start the construction within the first quarter of 2016. We attracted financing at the time when copper price has dropped in the world market, while the world is facing with financial difficulties. There is no case of raising US$ 4.4 billion loan for developing country like Mongolia in the world`s mining history. It is the biggest loan.
Such loan cannot be easily raised by the mining companies. What I see, loan holders have confidence for the future of Oyu Tolgoi LLC. Also they have positively seen the relations between the Government of Mongolia and Oyu Tolgoi LLC. In addition, people can see how the world`s finance market evaluating and hoping for Mongolia. However, the world`s largest financial institutions are interested in "Oyutolgoi" project. Underground mine finance is led by Rio Tinto. The main data of the finance project agreement is that Rio Tinto has agreed to provide guarantee.
-Will the US$ 4.4 billion be spent only on underground mine financing?
-Indeed. US$ 6 billion is required for underground mine.
-Have you started to raise remained US$ 1.6 financing?
-No. We have not started yet. Construction of underground mine will take 6-7 years. We will find a different solution to make next financing depending on the copper prices at that time. If the copper price increases in the near future, we will use our operational income for the remaining financing. But it is too early to talk about this as of now.
-How many percent of works in underground mine have been done currently?
-It is hard to say in percent, but you can understand that we have done 5-10 percent of work. We will construct five tunnels. One of them have been finished. Now the second one is being built and it comes to the middle. Cross digging is 15 km long. 200 km cross digging to be done again. The construction will be finished at least five years later.
-Dispute on overspending has continued for two years. What will you do if such dispute to start again in one or two years later?
-US$ 4.4 billion is one part of the total budget. The condition can be changed depending on many causes such as copper price, construction material, geological features and time. All shareholders including the Government, Rio Tinto, Turquoise Hill and 20 commercial banks have desire to reduce the budget and run mine at low-cost with high efficiency. In short, we're all sitting on the same boat.
-Therefore 20 international financial institutions to monitor the operation of underground mine?
-Yes, indeed.
-Does the 34 percent of US$ 4.4 billion is the Government`s loan? Will it create burden for the next year`s budget?
-No, we should not consider this way. Because this is the loan of Oyu Tolgio LLC. It is not the loan of the Government. Even though the Government owns the 34 percent of shares, it does not mean that the 34 percent of loan will be repaid by the Government. Oyu Tolgio LLC will be responsible for the loan repayment. The Government of Mongolia won't take the risk. Turquoise Hill and Rio Tinto have released guarantee for the loan too.
-Some MPs have agreed to dismiss PM in accordance with the Oyu Tolgoi deal in Dubai and started to collect signatures. Today you are going to hold verification ceremony with delegations of the Government. In your opinion, Dubai contract could become the basis for the resignation of the PM. Is it really politicized topic?
-Dubai contract was established in accordance with the Law of Mongolia, Investment Agreement and contracts made between the shareholders. We conducted research on laws. It is wrong to express my and Rio Tinto`s opinion on political matters. We are investors to Mongolian company and we work for profit. As we made all contracts in accordance with the law, it does not matter that whether is it PM Ch.Saihanbileg or other person. The most important thing is to cooperate with current Government.
Anyway the plan goes forward. We respected the Government when we made contract. We aimed at intensifying the construction and working productively.
"34 percent will not to be imposed on Government although it owns 34 percent"
We all know that the world market of copper and gold is at difficult situation. However, operation of Oyutolgoi LLC is going normally and cash flow has been positive, emphasized the Chief Executive Officer and the President of Oyu Tolgoi LLC Andrew Woodley.
Safety of Oyu Tolgoi LLC leads not only Mongolia, but also the international mining companies. Yesterday, 20 commercial banks approved the financing of US$ 4.4 billion to the development of underground mining of Oyu Tolgoi LLC. Oyu Tolgoi`s underground mining has more than 1000 years capacity.
It is wrong to express my and Rio Tinto`s view on political matters.
We are delivering you the interview with Rio Tinto Country-Director S.Munkhsukh.
-What role have Rio Tinto played in raising funds for underground mine?
-US$ 4.4 billion project financing is provided as a loan. It is considered as the biggest step that forwards the underground development. We raised the most of the financing needed to construct the underground mine. We have planned to start the construction within the first quarter of 2016. We attracted financing at the time when copper price has dropped in the world market, while the world is facing with financial difficulties. There is no case of raising US$ 4.4 billion loan for developing country like Mongolia in the world`s mining history. It is the biggest loan.
Such loan cannot be easily raised by the mining companies. What I see, loan holders have confidence for the future of Oyu Tolgoi LLC. Also they have positively seen the relations between the Government of Mongolia and Oyu Tolgoi LLC. In addition, people can see how the world`s finance market evaluating and hoping for Mongolia. However, the world`s largest financial institutions are interested in "Oyutolgoi" project. Underground mine finance is led by Rio Tinto. The main data of the finance project agreement is that Rio Tinto has agreed to provide guarantee.
-Will the US$ 4.4 billion be spent only on underground mine financing?
-Indeed. US$ 6 billion is required for underground mine.
-Have you started to raise remained US$ 1.6 financing?
-No. We have not started yet. Construction of underground mine will take 6-7 years. We will find a different solution to make next financing depending on the copper prices at that time. If the copper price increases in the near future, we will use our operational income for the remaining financing. But it is too early to talk about this as of now.
-How many percent of works in underground mine have been done currently?
-It is hard to say in percent, but you can understand that we have done 5-10 percent of work. We will construct five tunnels. One of them have been finished. Now the second one is being built and it comes to the middle. Cross digging is 15 km long. 200 km cross digging to be done again. The construction will be finished at least five years later.
-Dispute on overspending has continued for two years. What will you do if such dispute to start again in one or two years later?
-US$ 4.4 billion is one part of the total budget. The condition can be changed depending on many causes such as copper price, construction material, geological features and time. All shareholders including the Government, Rio Tinto, Turquoise Hill and 20 commercial banks have desire to reduce the budget and run mine at low-cost with high efficiency. In short, we're all sitting on the same boat.
-Therefore 20 international financial institutions to monitor the operation of underground mine?
-Yes, indeed.
-Does the 34 percent of US$ 4.4 billion is the Government`s loan? Will it create burden for the next year`s budget?
-No, we should not consider this way. Because this is the loan of Oyu Tolgio LLC. It is not the loan of the Government. Even though the Government owns the 34 percent of shares, it does not mean that the 34 percent of loan will be repaid by the Government. Oyu Tolgio LLC will be responsible for the loan repayment. The Government of Mongolia won't take the risk. Turquoise Hill and Rio Tinto have released guarantee for the loan too.
-Some MPs have agreed to dismiss PM in accordance with the Oyu Tolgoi deal in Dubai and started to collect signatures. Today you are going to hold verification ceremony with delegations of the Government. In your opinion, Dubai contract could become the basis for the resignation of the PM. Is it really politicized topic?
-Dubai contract was established in accordance with the Law of Mongolia, Investment Agreement and contracts made between the shareholders. We conducted research on laws. It is wrong to express my and Rio Tinto`s opinion on political matters. We are investors to Mongolian company and we work for profit. As we made all contracts in accordance with the law, it does not matter that whether is it PM Ch.Saihanbileg or other person. The most important thing is to cooperate with current Government.
Anyway the plan goes forward. We respected the Government when we made contract. We aimed at intensifying the construction and working productively.